A Comparison of Consumers Store Patronage between South Korea and the United

States: Suggestions for the Marketing Strategy of the South Korean Discount Stores
by

Sook-Hyun Kim

Thesis submitted to the Faculty of the

Virginia Polytechnic Institute and State University
in partial fulfillment of the requirements for the degree of

MASTER OF SCIENCE
IN
CLOTHING AND TEXTILES

Jessie Chen-Yu, Chair

JoAnn Emmel
Noreen Klein

April, 2000
Blacksburg, Virginia

Keywords: Crossnational, Store patronage, Discount stores, Wal-Mart, Store/product attributes,

South Korean discount stores

Copyright 2000, Sook-Hyun Kim

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A Comparison of Consumers Store Patronage Between South Korea and the United
States: Suggestions for the Marketing Strategy of the South Korean Discount Stores
Sook-Hyun Kim

(ABSTRACT)
Since 1997, the retail industry of South Korea has suffered a decline in sales due to the
nations financial crisis. Because of the increase of price consciousness, discount stores have
become the stores most attractive to South Korean consumers. Many foreign discount companies
such as Wal-Mart have started participating in the South Korean market. However, they have
experienced some difficulties in understanding South Korean consumers (Choi, 1998). The
purpose of this study was to understand the differences between South Korean and the U.S.
consumers. The results can assist the U.S. companies when adjusting their marketing strategies
for the South Korean market. The specific objectives of this study were to (a) compare the
differences between South Korean and the U.S. consumers in demographics, shopping
orientation, perception of the importance of store and product attributes, and store evaluation,
satisfaction and patronage and (b) examine the relationships among the six variables. In addition,
South Korean consumers preferences toward the strategies used in the U.S. discount stores were
examined to determine whether these strategies could be adapted to South Korean discount
stores.
A model was developed as the framework for the study based on the store-choice model
proposed by Monroe and Guiltinan (1975), the apparel retail patronage behavior model proposed
by Shim and Kotsiopulos (1992), and the supermarket choice criteria and satisfaction model
proposed by Hutcheson and Moutinho (1998). The proposed model suggests that consumers
shopping orientation affects their perception of the importance of store and product attributes.
Consumers perception of the importance of attributes affects how they evaluate a store.
Consumers evaluation of the store then influences their satisfaction with the store. If consumers
are satisfied with the store, they choose to patronize the store.
A case study was conducted to test the model. Wal-Mart was selected as the target
discount store because it has achieved significant success and has a powerful market position
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domestically and internationally. A total of 234 participants recruited at Wal-Mart were included
in this study, 117 from South Korea and 117 from the U.S. A questionnaire was first developed
in English and then translated into Korean with the back translation check. Chi-Square, t-test,
ANOVA, Factor Analysis, and MANOVA were used for data analysis. The .05 level of
significance was set for all analysis.
Results showed that there were significant differences between the two countries in
participants occupation, marital status, age, education, the perception of the importance of
attributes in discount stores, and store evaluation and satisfaction. In both countries, most
participants were price conscious. Store patronage was not significantly different between the
two countries. When the relationships between variables were examined, results showed that the
proposed model is partially supported. In both countries, shopping orientation was significantly
related to the perception of the importance of attributes, and store evaluation was related to
satisfaction. However, the relationship between the perception of the importance of attributes and
store evaluation was only found in the U.S. but not in South Korea. This result suggests that
South Korean do not evaluate the performance of discount stores based on their perception of the
importance of product and store attributes. The relationship between satisfaction and store
patronage was only found in South Korea but not in the U.S. In the U.S., satisfied customers do
not significantly more patronize the store. Other variables, such as social class or personal
influences, may play a more important role in determining South Koreans store evaluation and
U.S. customers store patronage. More studies are needed to investigate these issues.
When South Korean participants preferences toward the strategies used in the U.S. were
examined, results showed that they preferred receiving sales information directly from mail
rather than from TV commercials. They showed a strong preference for using credit card,
because most discount stores do not accept credit cards. They preferred lower prices than more
sales personnel, but they liked more community involvement than lower prices. These results
suggest that South Korean discount stores should place a large emphasis on lower prices rather
than services because most customers are highly price conscious. The promotion strategy of
mailing flyers should prove more effective. The payment system of credit cards should be added
to provide the convenience of payment and community service programs should be developed to
increase store image and reputation.
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To my parents, Min-Ung Kim and Hyung-Shim Lee

and Tae-Young Na, my future husband

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ACKNOWLEDGMENT

The author wishes to acknowledge the enthusiastic guidance and advise, patience and
generosity of her advisor, Dr. Jessie Chen-Yu. Without her support and expertise, the
development of this research would not have been possible. The authors sincere appreciation is
extended to the thesis committee, Dr. JoAnn Emmel and Dr. Noreen Klein, for their
understanding, persistence and suggestions. The author would like to thank her friends from
church and school for their support and friendship. Very special thank is also expressed toward
her future husband, Tae-Young Na, for his understanding, faith and encouragement at various
stages in the research process. Finally, but certainly not least, the author would like to express
her deepest gratitude to her parents, Min-Ung Kim and Hyung-Shim Lee, and other family
members, Ji-Hyun Kim, Dong-Hyun Kim, and Jin-Ho Park, for their unconditional love, support
and encouragement.

TABLE OF CONTENTS

CHAPTER I INTRODUCTION AND FRAMEWORK FOR STUDY-------------- 1

Justification for the Study ------------------------------------------------------- 2
Conceptual Framework ----------------------------------------------------------- 5
Objectives of the Study ----------------------------------------------------------- 8
Delimitations ----------------------------------------------------------------------- 9
CHAPTER II REVIEW OF LITERATURE --------------------------------------------- 10
Retailing Systems in South Korea ------------------------------------------------ 10
Consumers Shopping Orientation ------------------------------------------------ 13
Consumers Shopping Orientation in the U.S. ------------------------- 13
Consumers Shopping Orientation in South Korea ----------------- 14
Discount Stores ------------------------------------------------------------------- 18
Discount Stores in the U.S. -------------------------------------------- 18
Discount Stores in South Korea --------------------------------------- 21
Wal-Mart -------------------------------------------------------------------------- 25
Important Store and Product Attributes for Store Patronage ----------------- 29
Important Store and Product Attributes in General ------------------ 29
Important Store and Product Attributes for Apparel Items --------- 32
CHAPTER III RESEARCH AND DESIGN METHOD-------------------------------- 36
Hypotheses ------------------------------------------------------------------------ 36
Sample ----------------------------------------------------------------------------- 40
Instrument Development -------------------------------------------------------- 40
Data Collection ------------------------------------------------------------------- 44
Data Analysis --------------------------------------------------------------------- 44
CHAPTER IV RESULTS------------------------------------------------------------------- 46
Hypotheses Testing------------------------------------------------------------------ 46
South Korean Customers Preference for Marketing Strategies--------------- 75
CHAPTER V SUMMARY, DISCUSSION, AND RECOMMENDATIONS------- 80
Summary------------------------------------------------------------------------------ 80
Difference in the Two Countries----------------------------------------- 80
Testing of the Model------------------------------------------------------- 81
Discussion and Implication-------------------------------------------------------- 85
Suggestions Related to Consumers Characteristics------------------- 85
Suggestions Related to Store/product Attributes----------------------- 86
Store-related attributes-------------------------------------------- 86
Product-related attributes----------------------------------------- 87
Environmental/credit card-related attributes------------------- 88
Suggestions Related to Store Patronage--------------------------------- 88
Recommendation-------------------------------------------------------------------- 89
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REFERENCE--------------------------------------------------------------------------------- 91
APPENDIXES
A
ENGLISH QUESTIONNAIRE------------------------------------------- 99
B
TRANSLATION OF KOREAN QUESTIONNAIRE----------------- 105
C
KOREAN QUESTIONNAIRE------------------------------------------- 110

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LIST OF TABLES
Table 2-1

Table 2-2
Table 2-3
Table 2-4
Table 2-5
Table 2-6
Table 3-1
Table 3-2
Table 4-1
Table 4-2
Table 4-3
Table 4-4
Table 4-5
Table 4-6
Table 4-7
Table 4-8

Table 4-9
Table 4-10
Table 4-11
Table 4-12
Table 5-1

The U.S. and South Korean consumers characteristics, shopping

orientation and the perception of the important of store/product attributes
in discount stores and department stores------------------------------------------18
Foreign discount stores in South Korea------------------------------------------- 24
Wal-Mart Stores Inc. annual financial report analysis-------------------------- 26
Important store attributes for store patronage------------------------------------ 32
Important product attributes for store patronage---------------------------------32
Important store and product attributes regarding apparel items--------------- 35
Questions for examining each shopping orientation---------------------------- 41
Different store attributes between Wal-Mart stores
in the U.S. and South Korea-------------------------------------------------------- 43
Factor analysis for shopping orientation------------------------------------------ 54
The mean scores of each factor for each shopping orientation segment------54
Factor analysis of importance of store/product attributes in general---------- 56
Factor analysis of importance of store/product attributes
regarding apparel-------------------------------------------------------------------- 58
Chi-square test for the frequency of purchase of coat, suits, and dress------- 63
The means of the importance of store/product attributes in general
among three shopping orientations------------------------------------------------ 65
The means of shopping orientations and the importance of
store/product attributes regarding apparel items--------------------------------- 66
Four-Way ANOVA test for the relationship between the levels of
importance of store/product attributes and overall evaluation
in general in the U.S.---------------------------------------------------------------- 68
ANOVA test for the relationship between overall evaluation and
satisfaction/dissatisfaction in general--------------------------------------------- 69
ANOVA test for the relationship between overall evaluation and
satisfaction/dissatisfaction regarding apparel items----------------------------- 70
ANOVA test for the relationship between satisfaction/dissatisfaction
in general and store patronage----------------------------------------------------- 71
ANOVA test for the relationship satisfaction/dissatisfaction
regarding apparel items and store patronage------------------------------------- 72
The similarities and the differences between the two countries--------------- 81

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LIST OF FIGURES

Figure 1-1
Figure 1-2
Figure 1-3
Figure 2-1
Figure 2-2
Figure 2-3
Figure 2-4
Figure 2-5
Figure 2-6
Figure 4-1
Figure 4-2
Figure 4-3
Figure 4-4
Figure 4-5
Figure 4-6
Figure 4-7
Figure 4-8
Figure 4-9
Figure 4-10
Figure 4-11
Figure 4-12
Figure 5-1
Figure 5-2

Growth rate of net sales in South Korean retail stores in 1997---------------- 3

Prediction of competitiveness scores of each South Korean
retailing sector in the year 2000--------------------------------------------------- 4
The model of store patronage and related variables----------------------------- 7
Expenses per visit in discount stores in South Korea in 1997----------------- 16
Important attributes for retailing stores in South Korea------------------------ 17
Average discount store size and net sales per store in the U.S.---------------- 20
Net sales growth of discount stores in South Korea---------------------------- 23
Increase on the number of discount stores in South Korea-------------------- 23
Attributes which consumers prefer in Wal-Mart-------------------------------- 31
Comparison of occupation between the two countries------------------------- 47
Comparison of marriage status between the two countries-------------------- 48
Comparison of age between the two countries---------------------------------- 49
Comparison of education between the two countries--------------------------- 50
Comparison of household income between the two countries----------------- 51
Comparison of expenditure of money at Wal-Mart on a single trip
between the two countries---------------------------------------------------------- 51
Comparison of expenditure on wardrobe last year
between the two countries---------------------------------------------------------- 52
Scree plot for shopping orientation------------------------------------------------ 54
Scree plot for store/product attributes in general-------------------------------- 56
Scree plot for store/product attributes regarding apparel items--------------- 58
The experience of purchase of the five apparel items-------------------------- 62
The experience of shop for coat, suit and dress, but never purchased-------- 63
The result model of store patronage and related variables
for South Korea---------------------------------------------------------------------- 82
The result model of store patronage and related variables
for The U.S.--------------------------------------------------------------------------- 84

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